Question

Learning Outcomes:

• Explain the forces driving and evaluate the impact of globalization (CLO: 1.3)
• Analyze the effects of culture, politics and economic systems in the context of international business (CLO: 1.9, 2.1)
• Carry out effective self-evaluation through discussing economic systems in the international business context (CLO: 3.6)

Report Writing

Select any publicly listed Saudi Company that operates in GCC, and write a (minimum of 1000 word) report covering the following points:                                   

(Marks: 10)

1. Present the study report with clear Introduction and Conclusion including your own views.

2. Using SWOT analysis, analyze the external and internal environment of your selected company.

3. Analyze the political, economic, cultural and legal challenges the company currently faces in any of the country it operates (select one country in which the company operates for this analysis).

Answer 1

The driving forces behind Globalization:-

• Cultural Exchange: People travel to different countries and share cultural beliefs and practices, prompting each other to know more about those practices and cultures. This creates a cultural understanding that drives globalization. One can see the craze people now have for Chinese takeout and Indian curries.
• Improved Transportation: With the technological advancement in the field of transport, like airplanes, fast-moving ships, and large vehicles, the world has come closer and now is termed as a Global Village.
• Low Barriers to Trade and Investment: The world trade is now done through free trade, bilateral, and multilateral trade agreements. This also drives globalization.
• Technological Change: Technology is the most important driver of Globalization. With the advancement in technology, we have seen numerous companies doing business, like Amazon, Alibaba, eBay, etc go online and started catering to the global population.

Globalization has also had a positive and negative impact on business. A few are outlined below:

Positive Impact:-

• Global Market: Businesses are now able to sell products in the global market. Globalization has opened avenues for new companies to establish their share in the market. Multinational corporations are a result of globalization.
• Cross-Cultural Management: The popular consumer culture of the economically dominant West is relentlessly and inevitably transforming other regions, cultures, nations, and societies. Attitudes and ideas about society, religion and technology are transformed by cultural diffusion brought by globalization.
• Foreign Trade: Globalization has created and expanded foreign trade in the world. Products that were only found in developed countries can now be found in developing and even underdeveloped countries across the world. This also helps to improve the economy of these countries.
• Foreign Investment: One of the most visible positive effects of globalization is the flow of foreign capital. A lot of companies have directly invested in developing countries, by starting production units and sales offices.
• Culture: Due to globalization, we are now able to experience the cultures of many geographies. Cooking styles, languages and customs have spread all due to globalization. The same can be said about movies, musical styles, and other art forms.

Negative Impact:-

• Job Insecurity: The developed countries have outsourced most of the manufacturing and white-collar jobs, which means fewer jobs for the people in those countries. Globalization has also led to the exploitation of labor. Safety standards are ignored to produce cheap goods.
• Fluctuation in Prices: Due to an increase in competition, developed countries are forced to lower down their prices for their products, this is because other countries like China and India produce goods at a lower cost which makes goods cheaper than the ones produced in developed countries.